strong dollar weak dollar

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Post on 15-Nov-2014



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DESCRIPTION Strong Dollar Weak Dollar There is circularity to trading Forex which we refer to as strong dollar weak dollar. How to trade Forex is to buy the dollar when it is weak and sell when it is strong. This Forex trading strategy works in channel trading but not so well during long established trends. Accurate technical analysis of Forex pairs leads to profits. And trading based on what the market has been doing often leads to an adjustment of the market and a move in the opposite direction. To the extent that there are no major fundamentals driving the market there can be changes that beget changes, the strong dollar weak dollar effect. The question for a Forex trader is how to make money at such times. Technical Analysis and Profits Technical analysis of major Forex currencies is usually quite accurate. These currencies trade in high volume and excellent liquidity. As such technical indicators can be highly predictive. In order to profit a trader needs to follow the market closely and respond to usually small moves. A time honored system was developed for trading rice in Japan in the days of the Samurai, Japanese Candlesticks. The use of these patterns allows many traders to accurately predict changes in market sentiment. Traders benefit from candlestick patterns in Forex trading because they are based on real market history and are highly predictive of future trends. An example if the Doji signal. This nearly flat candle with upper and lower shadows of varying lengths tells us that the market is undecided. In a flat market this information is of little use. However, with the strong dollar weak dollar oscillation effect the Doji can tell a trader that an upward trend is about to head down and that a downward trend is about to head up. Numerous other Candlestick signals help predict market reversal. One reads the first part of a time tested pattern and can reasonably expect that the next part of the pattern will occur. During a strong dollar weak dollar oscillation these patterns can lead to tidy profits. Fundamentals And The Strong Dollar Weak Dollar Effect We have commented on these pages that the debt crisis in Europe can lead to a weaker Euro. This can in turn lead to increased exports from Europe, higher employment, and increased profits. The end result can be a recovered and higher Euro. The same applies to the Yen, British Pound, or any other major currency. The strong dollar weak dollar phenomenon is not limited to just the US dollar and is not limited to short term fluctuations. However, to profit from the strong dollar weak dollar effect in the realm of fundamentals one needs to do more than just a little homework. In addition it is important to see through the chaff of economic and fiscal policy and the tendency of central banks to manipulate the markets via bluff and bluster.


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